Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Publication Date: 28 April 2017 Main Contact: Tan Sai Hong +65 6890 7788 [email protected] MAS proposes framework for Singapore Variable Capital Companies for collective investment schemes In a step towards further developing Singapore as a centre for fund management activities and investment fund domiciliation, the Monetary Authority of Singapore (“MAS”) issued a consultation paper on 23 March 2017 on the legislative framework for a new proposed corporate structure called the Singapore Variable Capital Company (“S-VACC”). The consultation closed on 24 April 2017. Tailored for collective investment schemes (“CIS”), the S-VACC structure will complement the existing CIS structures currently available in Singapore, namely unit trusts (constituted by way of trust deeds), companies incorporated under the Companies Act and limited partnerships governed under the Limited Partnerships Act. The S-VACC framework seeks to provide investment managers with greater operational flexibility in Singapore and allow CIS to consolidate the fund domicile with the respective fund management activities. MAS is also studying the tax regime for S-VACCs and exploring the feasibility of extending the current fund vehicle tax schemes to S-VACCs. Key features Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore 018989 T +65 6890 7188 F +65 6327 3800 E [email protected] S-VACCs to be governed by new Singapore Variable Capital Company Act (“S-VACC Act”) administered by Accounting and Corporate Regulatory Authority (“ACRA”) S-VACC structure may only be used as a vehicle for CIS and may be adopted by both open-ended and closed-end funds Sub-funds with segregated assets and liabilities can be created by registration with ACRA. Cellular structure proposed for S-VACCs under which a S-VACC is a single legal entity while its sub-funds operate as separate cells (without legal personality) S-VACC may freely redeem shares with valuation and redemption of shares carried out at net asset value (“NAV”) S-VACCs assets must be managed by a Permissible Fund Manager Oversight of fund manager and accountability to shareholders to lie primarily with board of directors. At least one director of the S-VACC to be a director of S-VACC’s fund manager S-VACCs consisting of Authorised or Restricted Schemes to appoint an approved custodian (an Approved Trustee that is accountable to MAS) to safeguard shareholders’ interests and take custody of S-VACC property S-VACCs to comply with anti-money laundering and countering the financing of terrorism (“AML/CFT”) requirements and outsource performance of AML/CFT duties to fund manager S-VACC directors may dispense with an annual general meeting (“AGM”) subject to conditions Allen & Gledhill LLP (Registration No. LL0700925W) is registered in Singapore under the Limited Liability Partnerships Act 2005 with limited liability and was converted from a firm (with the name “Allen & Gledhill”) to a limited liability partnership on and as from 1 July 2007. A list of the partners and their professional qualifications may be inspected at One Marina Boulevard, #28-00, Singapore 018989. Structure governing S-VACCs MAS proposes to introduce a new S-VACC Act to govern S-VACCs in a manner similar to the way the Companies Act governs companies. ACRA will be the Registrar for S-VACCs and administer the S-VACC Act while MAS will supervise a S-VACC’s compliance with its AML/CFT obligations under S-VACC legislation. The S-VACC structure may only be used as a vehicle for CIS. Only S-VACCs incorporated under the S-VACC Act may use the term “S-VACC” in their names and hold themselves out as S-VACCs. MAS proposes that both open-ended and closed-end funds may adopt the S-VACC structure. The rights of and limits to redemption have to be clearly set out in the constitution of the S-VACC to ensure S-VACC investors are clear about their rights of redemption. Segregation of assets and liabilities under cell structure for sub-funds To enable S-VACCs to benefit from the economies of scale associated with umbrella funds, e.g. sub-funds sharing a board of directors and some services providers, MAS proposes to allow S-VACCs to use a cellular structure under which a S-VACC is a single legal entity while its sub-funds operate as separate cells (each without legal personality). Incorporation will be done only once for the S-VACC. A sub-fund will be constituted by registration with ACRA, upon which ACRA will provide it with a unique sub-fund identification number. Shares and share capital To facilitate redemption of shares at the option of investors (for open-ended funds) or by the CIS (for closed-end funds) and to allow payment of dividends out of capital, MAS proposes to allow a S-VACC to freely redeem shares and use its capital to pay dividends. Meetings MAS proposes that the directors of a S-VACC may dispense with the AGM by giving at least 60 days’ written notice to shareholders. However shareholder(s) with 10% or more of the total voting rights may require an AGM by giving 14 days’ notice to the S-VACC before the date by which an AGM would have been required to be held. Corporate governance Board of directors: It is proposed that at least one director of the S-VACC has to be a director of the S-VACC’s fund manager, and S-VACC directors are to be subject to disqualification and duties akin to those under the Companies Act. Additionally, the directors have to be fit and proper persons. With additional protection to retail investors in mind, MAS proposes to require S-VACCs consisting of Authorised Schemes to have at least three directors, at least one of whom has to be independent of (i) business relationships with the S-VACC, (ii) the fund manager of the S-VACC (and its related entities), and (iii) all substantial shareholders of the S-VACC. Residency requirements: To ensure all S-VACCs have both form and substance in Singapore, and are accessible to investors and regulators, MAS proposes residency requirements mirroring those in the Companies Act: (a) registered office must be in Singapore; (b) at least one director must be resident in Singapore; and (c) a Singapore-based company secretary must be appointed. Permissible Fund Manager: MAS proposes to require a S-VACC to appoint a Permissible Fund Manager to manage its property, i.e. a licensed fund management company, a registered fund management company or a financial institution exempted under the Securities and Futures Act (“SFA”) from having to hold a capital markets services licence to carry on business in fund management. The fund manager will carry out the day-to-day management and investment activities of the S-VACC under the oversight of the S-VACC’s board of directors. AML/CFT requirements: S-VACCs will be imposed with AML/CFT requirements and supervised by MAS for compliance. MAS will require a S-VACC to outsource the performance of AML/CFT duties to its fund manager, and hold the S-VACC ultimately responsible for compliance with its AML/CFT requirements. Approved custodian Similar to Authorised and Restricted Schemes structured as unit trusts under the SFA, MAS proposes to require S-VACCs consisting of Authorised or Restricted Schemes to have an approved custodian that is an Approved Trustee who will safeguard the rights and interests of shareholders of the S-VACC and take custody of the S-VACC’s property. An Approved Trustee refers to a public company that is approved by MAS to act as a trustee for Authorised Schemes under section 289 of the SFA. Additionally, for S-VACCs consisting of Authorised Schemes, MAS proposes to require the approved custodian to be independent of the S-VACC’s fund manager and to monitor the fund manager’s compliance with the CIS Code. Re-domiciliation Amendments to the Companies Act will be made to introduce an inward re-domiciliation regime in Singapore. This will allow foreign corporate entities to transfer their registration to Singapore. MAS proposes to adopt the same requirements under the inward re-domiciliation regime under the Companies Act for foreign structures that are equivalent to a S-VACC to re-domicile as a S-VACC in Singapore. Winding-up of S-VACCs and sub-funds MAS proposes adopting a winding-up regime similar to that under the Companies Act for S-VACCs and sub-funds. For the segregation of assets and liabilities of sub-funds to apply during insolvency, each sub-fund that becomes insolvent may be wound up as if it were a separate legal person. Claims of creditors of a sub-fund being wound up may only be paid out of the assets of that sub-fund, and not from the other assets of the S-VACC (including the assets of other sub-funds). Further, MAS proposes additional grounds for winding up S-VACCs. Reference materials The following materials are available on the MAS website www.mas.gov.sg: Media release Consultation Paper on the “Proposed Framework for Singapore Variable Capital Companies” Draft Singapore Variable Capital Company Act For further information, please contact: Investment Funds Lai Shieh Lin +65 6890 7630 [email protected] Ng Wuay Teck +65 6890 7422 [email protected] Danny Tan +65 6890 7738 [email protected] Tan E-Ping +65 6890 7784 [email protected] Tan Sai Hong +65 6890 7788 [email protected] Sarah Teo +65 6890 7743 [email protected] BT & REITs Chua Bor Jern +65 6890 7772 [email protected] Foong Yuen Ping +65 6890 7622 [email protected] Jerry Koh +65 6890 7770 [email protected] Jonathan Lee +65 6890 7412 [email protected] Long Pee Hua +65 6890 7746 [email protected] Teh Hoe Yue +65 6890 7116 [email protected] This was first published in the Allen & Gledhill Legal Bulletin (Vol 29, No 4 April 2017). It is intended to provide general information. Although we endeavour to ensure that the information contained herein is accurate, we do not warrant its accuracy or completeness or accept any liability for any loss or damage arising from any reliance thereon. The information herein should not be treated as a substitute for specific legal advice concerning particular situations. If you would like to discuss the implications of these legal developments on your business or obtain advice, please do not hesitate to approach your usual contact at Allen & Gledhill LLP or you may direct the inquiry to [email protected].